RALEIGH – Know Foods Corp., operating as KnowSeafood, a direct-to-consumer seafood delivery company that uses blockchain technology to document and display transparency in the harvesting, production, and delivery process, has raised more than $1 million, according to a recent SEC filing. And more money is coming.
The firm plans to raise up to $2 million in an oversubscribed seed round, said co-founder Daniel McQuade in an interview with WRAL TechWire. It’s among a growing number of firms in the Triangle focusing on alternatives to traditional food production and selling such as Jellatech and Without a Trace Foods.
A few years ago, McQuade and co-founder Paul Neves believed American consumers deserved the right to know the full supply chain for the food they purchase and consume. In fact McQuade essentially cold-called IBM after IBM announced a project known as IBM Food Trust, to pitch big blue on an important use case for deploying blockchain technology in the food production and processing industries: seafood.
According to McQuade, after his presentation, the IBM team with whom he met told McQuade that his presented use case was the best possible one for blockchain technology.
McQuade and Neves knew there was opportunity. They both envisioned a future where blockchain could be used to preserve and document each step of the seafood food production process, including from the time of harvest, using Internet of Things devices on fishing fleets to log and store key parts of data.
Then: the global coronavirus pandemic.
Where others might have seen challenge, McQuade and Neves found opportunity, pivoting, quickly, to determine whether there was a direct-to-consumer model that would provide consumers transparency, quality food, and easy and affordable purchasing power. They tested the concept through an IndieGoGo crowdfunding campaign, while they were conducting customer validation interviews, building the technology platform and website, and expanding relationships with harvesters and suppliers.
What they found: customers will pay, sometimes much more, for a high-quality product with a transparent sourcing story.
“People loved it, people love knowing where their seafood comes from,” said McQuade. “And that was the whole idea, could we have more people eat healthier seafood.”
Sharing data ‘every step of the way’
That’s the value of using blockchain technology, said McQuade. “We could use blockchain to take the harvest data, and share it with the consumer, at every step of the way.”
They launched their online marketplace in 2020, and the company is already reporting positive growth. Importantly, said McQuade, more than half of orders that take place on the company’s website are from prior customers, which McQuade said demonstrates that there is incredible value to the company’s platform and the use of technology.
McQuade cited data that shows Americans eat roughly 16 pounds of fresh seafood each year, which is much, much lower than the quantity of beef, pork, or chicken. Seafood, when sourced properly, is an incredibly healthy alternative, argued McQuade, and that’s what the company is seeking: expanding the total number of people who see seafood as a viable, healthy alternative and substitute to their and their household’s weekly diet.
“But because of the fraud issues, and that 90% of seafood is imported, people just don’t trust seafood,” said McQuade. With KnowSeafood, though, customers can see, in advance, every step of the production process, including reading stories about the harvest such as the name of the boat, the name and background of the captain of that boat, and the time between harvest, preparation, and preservation of the catch.
“We created this platform, and we were the first in the world who shared this information, before a customer bought it,” said McQuade. “You can see the source, before you purchase.”
“People want to eat healthy seafood more often, but quality is so important,” said McQuade. People also care about sustainability, and for KnowSeafood, that doesn’t just mean the fish, scallops, shrimp, or other seafood products they sell through their online platform.
“Seafood being sustainable means a lot more than the fish,” said McQuade. “What about the environment the fish is living in, what about the ocean itself, what about the community that’s supported by harvesting the seafood?”
McQuade discussed how suppliers that the company is partnering with to produce sustainable, transparent seafood are changing their practices, knowing that 85% of the species that are fished are overfished. That means some interesting conversations, and fascinating new technologies, including the use of one Ecuadorian supplier using plant-based feed that’s more sustainably produced than other alternatives.
“We must have alternatives,” said McQuade. “That is what our mission has been.”
McQuade noted that the company began fundraising in 2020. According to SEC Filings, the company has amended its fundraising requests twice. That’s because the funding round became oversubscribed, and the company continued to raise money from potential backers and investors past the one-year mark, said McQuade.
“We began working on this in March, April of 2020,” said McQuade. “We went out and spoke to global harvesters.”
They also began to speak to investors, and while some of the funding raised thus far comes from individual investors, said McQuade, they’re also receiving significant interest from individuals or funds involved in sustainability or in bioagriculture.
Originally, the company planned to raise $1 million. Now, said McQuade, the company anticipates closing $2 million in the seed round, with a potential Series A round to follow later this year. The Series A round would focus on raising funds in order to scale the company through funding customer acquisition, as well as potentially opening new distribution centers in the United States, said McQuade.
The company would also plan to expand its platform and offerings to customers, including launching some form of rewards system, access to a community, recipes from chefs, and other features and benefits.
“We want to be a company you trust, that we can educate you for what you look for in seafood, and even if you don’t buy from us, we want you to eat healthier, more often,” said McQuade. “It’s been quite a journey to bring something new to the marketplace, where you can use technology like this, to really create engagement.”
“We wanted to develop something for consumers who care where their food comes from, and we wanted them to enjoy seafood,” said McQuade.